1637.HK WACC - Weighted Average Cost of Capital

The WACC of SH Group (Holdings) Ltd (1637.HK) is 19.1%.

The Cost of Equity of SH Group (Holdings) Ltd (1637.HK) is 5.90%.

The Cost of Debt of SH Group (Holdings) Ltd (1637.HK) is 48.30%.

	Range	Selected
Cost of equity	5.00% - 6.80%	5.90%
Tax rate	16.40% - 19.40%	17.90%
Cost of debt	7.00% - 89.60%	48.30%
WACC	5.3% - 32.9%	19.1%

WACC

1637.HK WACC calculation

Category	Low	High

Long-term bond rate	2.9%	3.4%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.36	0.42

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.00%	6.80%

Tax rate	16.40%	19.40%
Debt/Equity ratio	0.66	0.66
Cost of debt	7.00%	89.60%

After-tax WACC	5.3%	32.9%


Selected WACC	19.1%

1637.HK's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for 1637.HK:

cost_of_equity (5.90%) = risk_free_rate (3.15%) + equity_risk_premium (6.50%) * adjusted_beta (0.36) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.